May 30, 2017 Read More →

Coal in Decline: Case Study, India

Hellenic Shipping News:

The glut of power doesn’t mean that every corner of the country is electrified—rather, it gestures strongly towards inertia, uneven distribution, and redundancy. “There are many coal plants which aren’t functioning at full capacity,” says Ashish Fernandes, a senior campaigner at Greenpeace. This under-utilisation, he points out, has led to an abundance of stale power contained inside state-owned distribution companies.

Another reason for the overabundance: rural areas that lack electricity can’t seem to afford the price of it. The cost can range from around Rs120 ($1.86) to Rs500 ($7.75) per month for domestic utilities, depending on the state. “If [residents] can’t afford the power, it doesn’t matter what fuel they use,” says Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis (IEEFA). “You’ve got to solve energy poverty, education, and employment to address that problem,” he adds. “You can’t keep building expensive coal-fired power plants that pollute the country and think there’s going to be demand—[some residents] just can’t afford it.”

Even when data shows an area as having electricity, it may not mean much, Fernandes says. “We need to look at individual households that have power. According to the government data, if you have one building or streetlight in a rural area that has power, the entire town is considered to be connected,” he adds.

A report by Greenpeace published in October 2016 identified 65GW of coal power stations under construction in India and an additional 176GW of projects at various stages of obtaining permissions. The report forecast that 94% of the capacity being built would not be needed by 2022, representing a waste of $49 billion in investments. This could partly explain why a $150 million coal plant in the state of Maharashtra is currently sitting idle, with a lack of demand from power generators. And it could also explain why another state in India, Gujarat, has walked away from a $4 billion coal plant of 4000 megawatts this month. “There is no financial investment to fund coal in the Indian market because they’re simply not competitive against solar energy prices right now,” says Buckley.

As prospects for India’s coal sector are falling, so is the price of renewable energy. In turn, the country’s future outlook, if all goes accordingly, is pretty good news for the planet. India first set a record-low price in February this year when a kilowatt-hour of solar energy was selling at Rs2.97 ($0.046). This month, the country hit another record low—the price of solar dropped 12% further, currently selling at Rs2.62 ($0.041) per kilowatt-hour. “

To spell it out, new solar is 15% cheaper than existing domestic coal. No one, anywhere in the world, was expecting solar to get that cheap for at least a decade,” Buckley says, “and India just got there this year.” It’s a marked shift for India—which, in a matter of months, went from potentially thwarting global climate goals to possibly saving them.

From coal to solar, India’s energy landscape is almost too hard to keep up with

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